To all those wondering why the Treserve scrambled on Friday to allow banks to resume paying dividends (even something as downright hilarious as Citi's $0.01...Is that the lowest recorded dividend yield in history?) here is your answer. The Treasury just announced it would sell its $142 billion MBS portfolio, supposedly to the same banks who are now using their cash on the books to satisfy shareholders too. The Treserve will sell $10 billion per month depending on market conditions, meaning a downtick in the market will now crash not only that given day's POMO (a UST market operation), but also have a reflexive impact on the entire MBS trading complex. As usual we can't wait for Directive #1 which will make selling any share an act of treason.

The Treasury Department said Monday that it will begin to sell its
portfolio of $142 billion in agency-guaranteed mortgage-backed
securities. A senior Treasury official said the department plans to sell
up to $10 billion in MBS per month subject to market conditions. The
sales could generate a profit for taxpayers of about $15-$20 billion as
market conditions have improved, the official said. Congress gave
Treasury the power to purchase the securities guaranteed by Fannie Mae
and Freddie Mac to provide stability to financial markets during the
financial crisis of 2008. The official said the sales were not related
to the looming debt ceiling.

As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels, meaning the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it, and another 10-20% drop in the value of the former reserve currency.

I am all for that. Load them back up boys and get em while they are hot. Looks like the great unwind is about to commence and judging by the reverse repo experiments noted on ZH last year I am sure it is going to go Swimmingly.

It would seem that your dissonance is coging you. Suggest you chuck back a handful of Pfizer products...it should straighten things out for you so that you can see the beauty of the Ponzi Fed more clearly.

The new American Marxist/Banker party asks that you quit sweating the details.

Maybe it's my simple mind, but every time I see that phrase about how someone will turn a loss on each sale into a profit by way of volume, the absolute and shear absurdity of the entire proposition makes me laugh out loud. Yet the brilliance of the con is remarkable because people swallow the bullshit.

Exactly. What's more is that they'll simply ramrod it harder as it gets worse, literally. Once it's not real then it's not real. There isn't anything to try to feign now, especially credibility. Everyone knows it's bullshit so why not just go for it.

Remember, it's not a lie if you believe it. Obviously, the equities markets are the one and only game in town. It doesn't have to represent anything, actually. Most people don't even know what equity is. They only know their 401(k) statement was larger.

Give credit where credit is due, they are subduing the masses quite well.

LOL, it's all about the 401(k)'s. I would say that 95% of people in 401(k)'s don't even know what they 'own'. It's just the system was provided to them and they were told to participate.

It's a way for the banks to recapitalize without congressional approval and to silence the masses while they do it. Yes, they'll be the eventual bag holders.

Try to have a logical discussion with Betty the admin assistant about why pushing up the equity markets is wrong. She'll immediately point to her 401(k) statement and have a deeply confused look on her face. Then, when the discussion gets complicated, dismiss you and say "well, it's up, that's all I know".

The American "markets" open, stocks surge and the price of silver starts its downward slide. Rediculous. We need updated graphs showing the price action of silver when the American market is open and when it's closed. Manipulating bastards.

So...we buy up all the toxic debt MBS from the banks to save the financial system, then sell them back to the banks to save the Fed? I'm assuming in two more years when the MBS crash the banks again, the Fed will buy them back again for pennies on the dollar, and we can lather/rinse/repeat this cycle until the debts are essentially gone and the investors/taxpayers fully screwed?

If the toxic stuff begins to get real marks, OTTI will become a household acronym. More likely: banks collude on pricinig and make it up under clusterswap arrangements with each other. subspicies of the genus clusterflock.

Please elaborate on your definition of "own". Do I own a home? Yes. Do I have a mortgage? No. That is my definition of "owning" a home.

Once you "own" your home, you tend not to be so concerned about being underwater or not. I don't treat any of my properties as an investment (or ATM with cash-out refi). They are a necessity, like food and water. Gotta have shelter.

ddon't know if it related to the Treasury MBS sell off, but last week's FED balance sheet had an interesting turn. Bank reserves fell by $44bn (after growing $300 bn in the prior 5 weeks). The Treasury's checking account at the FED increased by a corresponding amount (plus $25 bn more as the FED paid off more of the SFP).

So, are bank reserves now going to be transferred to the Treasury on a sustained basis. Put into the Treasury's checking account, the Treasury could then write plenty more checks to cover the cost of govt. operations.

Of course, the FED would have to have the wherewithal to cover those checks. Which they have done recently by borrowing money from the banks in the form of a data punch entry increasing the amount of bank reserves.

Treasury sounds much like my degenerate gambling uncle who always bragged about his casino wins but dare not speak of his losses. Of course when added up the losses outpaced the wins by a large margin and the poor fellow went completely bust.

Treasury sold its final share of Citigroup common stock, locking in a profit of more than $12 billion on that TARP investment. General Motors’ (GM) recent initial public offering cut Treasury’s common stock stake in that company nearly in half and brought in a total of $13.5 billion for taxpayers. Additionally, Treasury recently received $9.6 billion in TARP repayments through the sale of its Ally Financial trust preferred securities holdings and AIG’s sale of its MetLife equity stake.

Perhaps a never ending series of financial crises is the new growth industry?